Mohegan Sun's $1.6 BILLION Debt, Potential Foxwoods Default

Dances with debt: Sun casino forced to restructure $1.6B load
By JOSH KOSMAN and KAJA WHITEHOUSE


The owners of Connecticut’s Mohegan Sun casino are hoping talks to restructure its heavy debt load don’t come up snake eyes.

The country’s second-largest casino, facing a debt payment of more than $500 million in April amid eroding revenue, is hoping the long-standing talks come up aces because it needs to free up cash to fund an aggressive expansion program.

The Mohegan Tribal Gaming Authority, which runs the 364,000-square-foot casino, has been battling falling revenue for years — it is down nearly 20 percent since 2007.

And the forecast isn’t any better. Earlier this week, Massachusetts Gov. Deval Patrick signed a bill legalizing casino gambling in the Bay State, which could divert thousands of regional gamblers to other casinos.


Mitchell Grossinger Estes, CEO of the MTGA, knowing the casino has to grow or risk getting crushed, has been pushing a growth and diversification agenda.

But the program needs cash to make it a success — which means the ongoing talks with lenders are likely No. 1 on his agenda.

“We’re working diligently on a financing solution,” Estes told The Post this week, declining to give any details. The MTGA owes a total of $1.6 billion .

One MTGA project — bidding on a prospective casino site in Western Massachusetts — will require roughly $100 million, and Estes needs lender approval to fork over the cash. It may need the cash in as little as six months.

If it does not get the funds to bid for the Palmer, Mass., license, a competitor will likely get it and take some of Mohegan Sun’s market share.

Acknowledged Estes: “Everybody is aware of the need for the company to grow.”

Mohegan Sun gets 20 percent of its revenue from Massachusetts residents.

The negotiations with its creditors have gone on about six months without a deal.

“There have been ongoing discussions for a meaningful period of time,” a Mohegan lender said.

Estes is also pushing an effort to grow Mohegan Sun into a national brand. The CEO is pursuing a plan to run or build casinos in at least three other locations, including the Catskills. In July, he even launched Mohegan Gaming Advisors to pursue management contracts and consulting agreements with other casinos and entertainment properties across the US.

Estes said the MTGA has killed a Wisconsin casino project, but has the money to invest in the Catskills casino if its partner, real-estate developer Louis Capelli, can beat off competitors and obtain a license.

Talks also continue between the neighboring Mashantucket Pequot Tribal Council, which runs Foxwoods casino, and its lenders.

The Pequots are pressuring their lenders to write off $500 million in loans so they can avoid a default. They are suggesting that if lenders do not concede, the tribe will default and keep Foxwoods — leaving lenders with nothing, since the casino is protected by being on tribal land, sources said.

MTGA’s Pocono Downs in Pennsylvania, which represents 12 percent of its earnings, can be repossessed as it is not on tribal land, though creditors can’t touch the Mohegan Sun.